I see certain towns, in my case more specifically Divinity's Reach have 'Cultural Armor Merchants'. Each one of these merchants has a tier which as I understand tiers with levels. What is the significance of this armor vs. other armor that you can find? Also, why is this armor separated by race? Is it strictly appearance?

The armor is roughly analogous to Prestige Armor from Guild Wars 1, though that armor was entirely cosmetic. Because of its higher cost, it's a way to reward players who have had the time/resources/money to acquire that much gold to afford the items.

As of this moment, because it's so early in release and the Trading Post is still disabled, it's difficult to know exactly how this armor compares, stats-wise, to the crafted Legendary sets in the game, though it is almost certainly better than the random mob drops.

You say "random mob drops". Does this apply to ANY mob drops? What about dungeons and such?
–
Emerica.Aug 28 '12 at 15:39

@Emerica. They have already stated that the dungeon rewards are better in regards to the cosmetic aspect only. They will still have the same stats as other max-level armors, it's just that the skins are rarer.
–
FAEAug 28 '12 at 15:51